Fired Fed governor Lisa Cook plans to sue Trump for illegal dismissal

In an unprecedented move, President Donald Trump announced the firing of Federal Reserve Governor Lisa Cook, citing allegations of mortgage fraud. The dismissal, which Trump declared on August 26, 2025, marks the first time a sitting president has attempted to remove a Fed official in the central bank's history. Cook, the first Black woman to serve on the Fed Board, swiftly rejected Trump's authority to terminate her, asserting that he has no legal grounds to make such a decision. She intends to fight the termination in court, underscoring the independence of the Federal Reserve as critical to maintaining economic stability and investor confidence. The allegations of wrongdoing stem from a criminal referral issued by Bill Pulte, a member of the Federal Housing Finance Agency, who accused Cook of making false statements regarding mortgage agreements. Trump used these allegations as a justification for his action, arguing the importance of accountability in financial regulation. However, Cook’s legal representative stated that the accusations lack substantial evidence and that her behavior before her appointment should not factor into decisions regarding her position. Legal experts and analysts have raised concerns that this action could threaten the established independence of the Federal Reserve, which is essential for the institution's ability to function without political interference. Historical precedents dictate that Federal Reserve officials can only be removed for cause, a legal interpretation that Cook's team asserts has not been met. The potential court battle over this incident may lead to essential legal determinations regarding presidential powers over independent government entities. Trump's actions appear to align with his ongoing criticism of Fed policies, particularly those under Jerome Powell’s leadership. In the past, Trump has exerted pressure for lower interest rates, frequently expressing dissatisfaction with the Fed's monetary policy. If successful in his attempt to remove Cook, this would give Trump a majority on the Fed board, allowing further influence over the region's economic policy and potentially leading to decisions unfavorable for long-term economic stability as influenced by political goals.