In a dramatic escalation of tensions between the White House and the nation’s central bank, Federal Reserve Governor Lisa Cook has filed a lawsuit seeking to block President Donald Trump’s attempt to remove her from the powerful seven-member board. The legal battle, which began with Cook’s lawsuit filed on August 28, 2025, in Washington, D.C. federal district court, marks an unprecedented test of presidential authority over the independent Federal Reserve and has ignited fierce debate across the political spectrum.
Cook’s legal action comes just days after Trump, on August 25, 2025, posted a letter on Truth Social announcing her removal for cause, accusing her of lying on mortgage paperwork. Trump’s move was based on allegations publicized by Bill Pulte, a Trump appointee and current Federal Housing Finance Agency Director, who claimed Cook misrepresented her primary residence on mortgage documents. Pulte referred these allegations to the Justice Department, though as of yet, Cook has not been charged with any civil or criminal violations.
Cook’s 14-year term, which began in 2022 after her appointment by President Biden, is scheduled to end in 2038. Her lawsuit, which also names Federal Reserve Chairman Jerome Powell and the board itself as defendants, seeks a judicial declaration that Trump’s attempt to fire her is unlawful and void. Specifically, Cook is asking the court to confirm her status as a board member and to prevent the Fed from complying with Trump’s order. The case has been assigned to U.S. District Judge Jia M. Cobb, a Biden appointee, with a hearing set for September 5, 2025.
"This case challenges President Trump’s unprecedented and illegal attempt to remove Governor Cook from her position which, if allowed to occur, would be the first of its kind in the Board’s history," the lawsuit states, according to Business Insider. Cook’s attorneys argue that the Federal Reserve Act requires a valid cause for removal—typically defined as misconduct, inefficiency, or neglect of duty—and that the allegations against Cook, even if true, do not meet this standard. "President Trump does not have the power to unilaterally redefine 'cause'—completely unmoored to caselaw, history, and tradition—and conclude, without evidence, that he has found it," the lawsuit contends.
For its part, the Federal Reserve has declined to comment on the ongoing litigation. However, a spokesperson reiterated the agency’s longstanding commitment to independence, noting, "Long tenures and removal protections for governors serve as a vital safeguard, ensuring that monetary policy decisions are based on data, economic analysis, and the long-term interests of the American people." The Fed has stated it will abide by any court decision in the matter.
Trump’s pressure on the Federal Reserve is not new. Since taking office, he has repeatedly called for lower interest rates, believing such a move would benefit his economic agenda. His criticism has extended to Fed Chair Jerome Powell, whom he has frequently berated and even threatened to replace. According to The Wall Street Journal, Trump has told advisers he wants to move swiftly to name a replacement for Cook should his removal effort succeed.
The stakes of the lawsuit are significant, not only for Cook’s career but for the very structure of the U.S. financial system. The Federal Reserve’s independence is widely regarded as crucial for preventing short-term political interests from dictating monetary policy. As Cook’s lawsuit argues, "A politically insulated Board of Governors can make appropriate, albeit unpopular, decisions—such as raising interest rates to combat inflation—that are crucial for the nation’s long-term financial health." Allowing presidents to remove governors over policy disagreements, the lawsuit warns, would "render illusory the Board’s independence."
The White House, however, maintains that Trump’s action was lawful. Spokesperson Kush Desai stated on August 28, 2025, that the firing complied with legal requirements. National Economic Council Director Kevin Hassett went further, suggesting Cook should take leave to preserve the Fed’s reputation, stating, "If I were her, in her circumstance, I would take leave right now." Hassett, whom Trump is reportedly considering as a replacement for Powell, argued that Cook’s refusal to step aside was partisan and undermined the Fed’s independence.
On the political front, the controversy has drawn sharp responses from both sides of the aisle. Rep. Ro Khanna, D-Calif., speaking on NBC News’ "Meet the Press" on August 31, 2025, accused Trump of "following Richard Nixon’s playbook to interfere with the Fed and bully the Fed." Khanna referenced Nixon’s infamous pressure on the Fed to keep interest rates low before the 1972 election, a move widely criticized by historians. While Khanna called for Cook to release her mortgage documents for transparency, he emphasized that "this has nothing to do with the specifics of Lisa Cook. This has to do with Donald Trump following Richard Nixon’s playbook to interfere with the Fed and bully the Fed." He further argued that Trump’s own tariff policies have contributed to inflation, making it harder for the Fed to cut rates.
Meanwhile, the Supreme Court looms in the background. Recent rulings have weakened job protections at independent federal agencies, but the high court has suggested the Federal Reserve may enjoy special status. In an unsigned order in May 2025, the justices described the Fed as "a uniquely structured, quasi-private entity," hinting at greater protections for its board members compared to those at agencies like the National Labor Relations Board or the Merit Systems Protection Board. Still, in a dissent, Justice Elena Kagan criticized this "bespoke" treatment, noting, "For the Federal Reserve’s independence rests on the same constitutional and analytic foundations as that of the NLRB, MSPB, FTC, FCC, and so on."
Cook’s legal team, led by high-profile attorneys Abbe Lowell and Norm Eisen, has accused Trump of inventing the controversy to pressure the Fed into lowering interest rates, thereby risking the long-term health of the U.S. economy. "President Trump’s conception of 'cause' has no limiting principle; it would allow him to remove any Federal Reserve Board member with whom he disagrees about policy based on chalked up allegations," the lawsuit asserts.
The outcome of this legal showdown could have sweeping implications for the future of the Federal Reserve and its ability to act independently of the White House. As the central bank prepares for its next policy meeting on September 16–17, 2025—with interest rates still above 4.25% to combat persistent inflation—the uncertainty surrounding Cook’s status only adds to the high-stakes atmosphere. The case is widely expected to be appealed, potentially reaching the Supreme Court, which could set a precedent for the balance of power between the presidency and the nation’s central bank for years to come.
As the courtroom drama unfolds, one thing is clear: the independence of the Federal Reserve, a cornerstone of modern American economic policy, is facing its most serious test in generations.
