President Donald Trump announced on August 25, 2025, that he was firing Federal Reserve Governor Lisa Cook, marking an unprecedented attempt to remove a Fed board member and escalating his pressure campaign against the central bank over interest rate policies.
In a letter posted to Truth Social, Trump accused Cook of mortgage fraud allegations, writing that the Department of Justice’s inquiry into whether Cook lied on mortgage applications provided sufficient cause for her removal. Cook, who was nominated by former President Joe Biden and confirmed by the Senate in 2022, became the first Black woman to serve on the Fed’s Board of Governors.
Cook immediately rejected Trump’s action, stating that the president had no authority to fire her. Her attorney, Abbe Lowell, indicated they would take legal action to prevent what they characterized as an illegal termination. Cook emphasized she would not resign and would continue performing her duties as she had since 2022.
The allegations against Cook originated from Federal Housing Finance Agency Director Bill Pulte, who filed a criminal referral with the Justice Department claiming she committed mortgage fraud by allegedly listing two homes as her primary residence on mortgage applications in 2021, before her Senate confirmation. Pulte has made similar accusations against other Trump political opponents, including California Senator Adam Schiff and New York Attorney General Letitia James, while reportedly ignoring similar cases involving Trump allies.
On August 28, Cook filed a lawsuit in U.S. District Court in Washington D.C., challenging Trump’s removal attempt. The lawsuit names Trump, Federal Reserve Chairman Jerome Powell, and other board members. U.S. District Judge Jia Cobb scheduled an initial hearing for August 29.
The lawsuit argues that Trump’s actions threaten the Fed’s independence and that the mortgage fraud allegations, even if proven, would not constitute sufficient cause for removal under the Federal Reserve Act. Cook’s legal team contends that the law requires cause to involve conduct while in office, such as inefficiency, neglect of duty, or malfeasance related to her Fed position.
According to the court filing, Cook was seeking an emergency injunction to remain on the seven-member board while her lawsuit proceeds through the courts. Legal experts expect the case could eventually reach the Supreme Court, which has previously shown deference to presidential removal powers but described the Federal Reserve as a “uniquely structured, quasi-private entity” deserving greater independence than other agencies.
No president has ever successfully fired a Fed governor in the agency’s 112-year history. The Federal Reserve Act traditionally limits presidential removal authority to cases involving wrongdoing, not policy disagreements. Trump has repeatedly demanded that the Fed lower its key interest rate from its current 4.3 percent level, but the central bank has kept rates unchanged for five consecutive meetings.
Cook serves on the Federal Open Market Committee, which sets interest rates for the nation’s reserve banks. Her removal would allow Trump to potentially gain a 4-3 majority on the Fed’s governing board if he successfully replaces her with a nominee supporting lower rates. Trump has already nominated White House economic adviser Stephen Miran to replace Fed Governor Adriana Kugler, who stepped down unexpectedly on August 1.
The attempted firing drew bipartisan criticism from economic experts and lawmakers. Former Treasury Secretary Larry Summers characterized the action as problematic politicization of the Federal Reserve, noting the lack of independent review or opportunity for Cook to present her defense. Senator Elizabeth Warren called the move an authoritarian power grab, violating the Federal Reserve Act that courts should overturn.
Cook, who holds a position until 2038, previously served as a professor of economics and international relations at Michigan State University and on the Federal Reserve Bank of Chicago’s board of directors. She initially filled a short, unexpired term before being renominated and confirmed to a full 14-year term by the Senate in 2023.
The U.S. Dollar Index declined following Trump’s announcement of Cook’s removal. White House Press Secretary Karoline Leavitt defended the president’s action, asserting he had sufficient cause as outlined in his letter to Cook and the public.
Cook stated she would “continue to carry out my duties to help the American economy” despite Trump’s purported termination. The case represents a significant test of presidential authority over the traditionally independent Federal Reserve, with potential implications for monetary policy and central bank autonomy.