Federal Reserve Board of Governor Lisa Cook is suing President Donald Trump over her dismissal from the panel that guides the nation’s monetary policy.
The suit, filed in federal court on Thursday, stems from allegations that Cook committed mortgage fraud before she joined the Federal Reserve. The case is likely headed to the Supreme Court and marks a major escalation in the growing clash between the White House and the Federal Reserve.
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The White House pushed back after the lawsuit, insisting Trump acted within his authority to oust Cook.
“The President determined there was cause to remove a governor who was credibly accused of lying in financial documents from a highly sensitive position overseeing financial institutions,” White House spokesperson Kush Desai wrote in a statement to Fox News Digital.
“The removal of a governor for cause improves the Federal Reserve Board’s accountability and credibility for both the markets and American people,” he added.
The Federal Reserve declined to comment. Cook’s lawyer did not immediately respond to Fox News Digital’s request for comment.
Trump wrote in a letter to Cook on Aug. 25 that he had “sufficient cause” to fire her, saying her dismissal was “effective immediately.”
TRUMP REMOVES FEDERAL RESERVE GOVERNOR LISA COOK FROM OFFICE, CITING FRAUD ALLEGATIONS
A day later, Cook said she would not resign from her post at the Federal Reserve, the world’s most powerful central bank. “I will continue to carry out my duties to help the American economy as I have been doing since 2022,” Cook wrote in a statement. Her term on the Federal Reserve Board of Governors runs through January 2038.
It is not immediately clear if Cook has attempted to enter the Federal Reserve’s main headquarters in the Foggy Bottom neighborhood in D.C. since Trump’s letter terminating her.
The Federal Reserve declined to say whether Cook has tried to work from her office, is working remotely or retains access to the email and other resources she needs for her job.
The Federal Reserve Board of Governors, commonly known as the Fed board, is composed of seven members, or governors, who are nominated by the president and confirmed by the Senate. This panel of central bankers is tasked with charting the nation’s economic path.
Cook’s ascension marked a historic first, as she became the first Black woman to serve as a governor on the Fed board. Now, her potential removal, entangled in legal action, could set another historic precedent.
The allegations were brought forward by Bill Pulte, a Trump appointee to an agency that regulates Fannie Mae and Freddie Mac. Pulte accused Cook of claiming two primary residences, one in Michigan and another in Georgia in 2021, with the goal of getting more favorable loan conditions.
On Aug. 15, Pulte sent the Justice Department a criminal referral regarding Cook in which he accused her of falsifying bank documents and property records.
TRUMP FIRED FED GOVERNOR LISA COOK OVER ALLEGED MORTGAGE FRAUD: WHAT DID SHE DO?
Cook has denied any wrongdoing, and said on the heels of Pulte’s referral that she has “no intention of being bullied to step down.”
“I do intend to take any questions about my financial history seriously as a member of the Federal Reserve and so I am gathering the accurate information to answer any legitimate questions and provide the facts,” Cook wrote in a statement.
The Federal Reserve has previously acknowledged Cook’s potential legal action and said in an Aug. 27 statement that the U.S. central bank will “abide by any court decision.”
“Lisa Cook has indicated through her personal attorney that she will promptly challenge this action in court and seek a judicial decision that would confirm her ability to continue to fulfill her responsibilities as a Senate-confirmed member of the Board of Governors of the Federal Reserve System,” a Federal Reserve spokesperson wrote in a statement to Fox News Digital.
Trump said during a Cabinet meeting on Tuesday that he was prepared for Cook’s potential legal fight.
“She seems to have had an infraction and she can’t have an infraction. And especially that infraction because she’s in charge of, if you think about it, mortgages. We need people that are 100% above board, and it doesn’t seem like she was,” Trump told reporters at the White House, referencing Cook’s alleged misconduct in securing mortgage loans.
When asked about replacing Cook on the Fed board, Trump told reporters that he has some “very good people for that position.”
Tensions between Trump and the Federal Reserve over monetary policy have intensified in recent months. Trump has placed the blame squarely on Federal Reserve Chairman Jerome Powell for not lowering the federal funds target rate, which he says could save the nation “hundreds of billions of dollars.”
Meanwhile, Powell has kept the central bank’s key borrowing rate target within a range of 4.25% to 4.5%, maintaining a measured, wait-and-see approach as officials gauge the economic effects of Trump’s tariffs. Over 80% of market participants are pricing in a 25% rate cut at September’s meeting, as tracked by the CME’s FedWatch Tool. which measures rate move probabilities.
“We’ll have a majority very shortly,” Trump said, adding that he will be able to have a greater influence in lowering rates. “So that’ll be great.”
Fox News Digital’s Rachel Wolf and FOX Business’ Eric Revell contributed to this report.
This is a developing story. Please check back for updates.
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