Fed Governor Lisa Cook to Sue Over Trump’s Decision to Fire Her, Attorney Says

The president responded in part by saying that ‘we need people that are 100 percent aboveboard.’

Federal Reserve Governor Lisa Cook speaks with leaders of nonprofits and a variety of businesses, in Washington on Sept. 23, 2022. Manuel Balce Ceneta/AP Photo

Federal Reserve Board member Lisa Cook plans to sue over President Donald Trump’s decision to fire her, an attorney for Cook said on Aug. 26.

“President Trump has no authority to remove Federal Reserve Governor Lisa Cook,” attorney Abbe Lowell said in a statement provided to The Epoch Times. “We will be filing a lawsuit challenging this illegal action.”

The lawsuit would follow several others challenging Trump’s removal of high-ranking bureaucrats—an issue that has called into question the nature of executive authority.

Trump sent Cook a letter on Aug. 25 stating that he was removing her “for cause,” citing “sufficient reason” to believe that she had made false statements on one or more mortgage agreements. According to the letter that the president posted on TruthSocial, Cook allegedly claimed in a mortgage document that her primary residence was in Georgia two weeks after claiming that it was in Michigan on another mortgage document.

“It is inconceivable that you were not aware of your first commitment when making the second,” Trump wrote. “It is impossible that you intended to honor both.”

He added that her alleged conduct “exhibits the sort of gross negligence in financial transactions that calls into question your competence and trustworthiness as a financial regulator.”

The president’s comments came after Bill Pulte, who leads the Federal Housing Finance Agency, sent the Justice Department a criminal referral letter alleging that Cook had “falsified bank documents and property records to acquire more favorable loan terms.”

During an Aug. 26 Cabinet meeting at the White House, Trump responded to news of the forthcoming lawsuit.

“She seems to have had an infraction, and she can’t have an infraction—especially that infraction, because she’s in charge of, if you think about it, mortgages, and we need people that are 100 percent aboveboard,” he said. “And it doesn’t seem like she was.”

Both Trump and the Federal Reserve said they would abide by court orders.

“As always, the Federal Reserve will abide by any court decision,” a Federal Reserve spokesperson said in a statement to The Epoch Times.

Cook’s attorney said Trump’s “attempt to fire her, based solely on a referral letter, lacks any factual or legal basis.”

His comments echoed other lawsuits in which bureaucrats alleged that the White House had failed to lay out sufficient reasons for firing them.

Congress has passed laws that attempt to set limits, such as needing a cause for termination, on the removal of officials such as Cook. Trump invoked the Federal Reserve Act, which states that “the President shall fix the term of the successor to such member at not to exceed fourteen years, as designated by the President at the time of nomination, but in such manner as to provide for the expiration of the term of not more than one member in any two-year period, and thereafter each member shall hold office for a term of fourteen years from the expiration of the term of his predecessor, unless sooner removed for cause by the President.”

The Federal Reserve spokesperson said that “Congress, through the Federal Reserve Act, directs that governors serve in long, fixed terms and may be removed by the president only ‘for cause.’”

“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 spokesperson said.

So far, Trump has had limited success countering these lawsuits in the courts. While multiple lower courts have ruled that he wrongly removed members of various agencies, the Supreme Court handed him a temporary win in May when it halted lower court blocks on his attempt to fire members of two labor boards.

That decision from the Supreme Court was relatively limited and did not delve into the more complex legal issues involved. If the Supreme Court takes up the issue at a later date, it could reconsider some of its precedents on executive power and to what degree Congress can shield agency heads.

One of the key legal issues in these disputes is determining how much executive power a particular official exercises. In May, the Supreme Court didn’t offer a final ruling but said in an unsigned order that it thought Trump was likely to succeed in the dispute because the president likely has authority over the two labor boards based on their exercise of executive functions.

“The stay reflects our judgment that the Government is likely to show that both the [National Labor Relations Board] and [United States Merit Systems Protection Board] exercise considerable executive power,” the court said. Justices Elena Kagan, Sonia Sotomayor, and Ketanji Brown Jackson dissented from that decision.

However, part of the Supreme Court’s decision indicated it thought the Federal Reserve received different legal protections than the labor boards.

“[The labor board members] contend that arguments in this case necessarily implicate the constitutionality of for-cause removal protections for members of the Federal Reserve’s Board of Governors or other members of the Federal Open Market Committee … The Federal Reserve is a uniquely structured, quasi-private entity that follows in the distinct historical tradition of the First and Second Banks of the United States,” the court’s unsigned opinion read.